First-quarter U.S. GDP seen dipping into negative territory

The U.S. economy almost certainly contracted in the first quarter during an unusually harsh winter, a government report to be released Thursday is expected to show. That’s because American exports didn’t increase as much as previously believed and construction spending was a bit softer, too.

Economists polled by MarketWatch predict gross domestic product will reveal a 0.6% decline in the first three months of the year instead of a meager 0.1% increase as originally reported. The report – the second of two updates to first-quarter GDP – will be released at 8:30 a.m. Eastern.

Does it really matter? Not all that much. The economy was repeatedly disrupted by cold and snowy weather and much of the activity that did not take place then is occurring now during the warmer spring months. Wall Street expects second-quarter growth to snap back with a 3.8% gain.

Keep an eye on corporate profits in the first quarter, a number the Commerce Department releases for the first time. Pretax profits adjusted for depreciation and the value of inventories climbed 1.9% in the fourth quarter to a record $2.13 trillion on a annualized basis. Corporate profits as a percentage of GDP stood at 10.2% in the fourth quarter, just a touch below a record high.

At the same time Thursday, the Labor Department will issue weekly jobless claims. They are forecast to fall slightly to 322,000 from 326,000 two weeks ago. And pending home sales for April will be released at 10 a.m. Pending sales rose 3.4% in March.